tse cllge an os,n hen guide the truman administration to take some bold actions from the marshall plan andhe blin if ierntn re kar atrong defense was to build the security capacity of our allies and our partne. that lecy ele to aen iul ton. r to advance the security and prosperity in the 21st century, we musntnd evenhairy stth a bveha the united states must place even greater strategic emphasis on building

the curi capabiesof ot. m ou a aeolra aoa security, both within the united states government and amon allies partners, and muilatrzas. omteopato soorfrhe truman doctrine to the nixon doctrine working with key allies and regialtner tui ei li sitor ca mmptfu. ti sitrategy after world war ii. this approach has enduredong yo t c w aor edatily,is ga nndprat poce a mission in the decade since 9/11. in 2006 the same year ashe souond, demeofen rel dse revw recognized the critical importance of having the authorities and resourcesto perform who it calle bing parsapy. ncthhitta edne iq in

afghanistan, confronted terrorism in the fata in yen, he horn oficn t ips aip i ea otiinyah edngad the approach of working with and through others hasonly grown in importance to ourssn of feg un rtar t trng si a partnering with foreign military and security forces hasved from the pfei bme a itil s ss mefo. its, y w the approach that this institute has promoted for nearly three decades. dip t iur rcasen ur aby ri t a oneoniost december. achieving our goal in afghanistan, simarly depends onuiganfgst t cacuovel itatno gng t strategy tha general allen is implementing on the ground as commander of the nato effort. as the war i ghann bs nd ud es

sorty t b t cu ot challenges and opportunities for the future. as we do so, tni es is plitthet dob t h reto rir o achieve significant savings nearly a half a trillion dollars in savings over the nex de ketenwd weexense thhohet, o times the threats the country was facing appeared to diminish. toilonty le ay tts tinuing threat of violent extremism, even though we've done significt damage to -q iakn, coue hrrm n, slinor africa. we confront the threat of weons olifio rohereofbe inio wetitoxen cyber attacks eery day. it is, without question, the

battlefield of the future. one ee t abinha o on lraan n kore the rise of new powers across asiand am anwee solos thddasndor ca th challenges coupled wh the new fiscal reality led us to reshb our priorities with a w fens segrhe cey. it seg t pes a te emphasis on building the capabilities of oers to help meet the security challenges of turan sta pef ere rnnaor teisuon five key elements. first, we know we are going to be smaller and leaner. that's ali wetmagilee, quicloe, ohe cutting edge of technology. second, we must remain strong enough to cfragsi an dt t on ame aceea w a,eabe able to deal with that at the

same time we deal with the possibility of closure of the straof hz,nd wl we maiat bi. irell a in to invest in the capabilities of the future. yes, oviye tet rpoilwieg uc tet en at stie also need to invest, invest in cyber stuned sms venpes i splorpeon abyuiil in the event of crisis and also the importance of maintaining ouindustrial b fo, ntry ris eiaif ginde let. these are the areas with the most significant security challenges. in those regns wewiai dnndha mar hauriryree. tourth wprt power and detour aggression, but we are also goin to help more nations share the onli ahe c

viecy veg ancnd partnerships as i explapped at the shank gray la dialogue earlier this month, and ly, wntes eler tor paul ieg l europe africa and latip america. we must use our skills and stemtold gis,ewpars thhoheld egi in ci tgh training assistance, and an innovative rotational deployments. the benefits of thisha artdapchecy reartoe o a trip i took to colombia in april. there the united stateshas spent yip t taoke orc trafficking terrorism nation that played that nation and others. not only has colombia made significantga as w sin f b itsteingp trafficking. colombia is now 1 of 14

countries workingpeve topeafer raer aisaznd chile and saw demonstrions of their capabities that are enabli t ri sri intrmeic ac tlo at isain these countries reenforced a new reali p tunst ofas pryro ddi others. we built permanent bases deployedarge forces aosshe e xe pio on aedat os re ll oab o ndmss. our new strategy recognizes that this is not theorld that we live 234 aym imenhiaty wianustsos entire national security apparatus. tonight, let me ouine a pantenti bungarshin sttu

its fundmental purpose is to improve our security operation across three broad areas. t,yin seg apchoecyopio dmareate comprehensive and integrated capabilities in key regions in order to confront critical curityhleng. nd riedee pantones nc sk s bies a nd to build and sustain partnerships. third, streamlining the department'sinal pss pe undrour ernros,an wog t rt state and congress to do the same. let me talk about the first point which is a comprensiv tricapch t riopio ed dtm t develop innovative approaches to meeting future security challenges. apprcheshat tak be adag t rtie forthid s re ect ace mm sitior t future. to that end i've directed all of the geographic combat and commanders tothink and plan

rategically ent cs ricoatclg of t rna ait omntrc exchanges, operations, to more traditional forms of security assistce. during theol ws. pars rte ciy dte te a se adversary, the soviet union. in the 21st century, we must bud partnerships that enable tottetid r ales t e i s bdi tw t leverage our unique capabilities and the unique strengths of our allies and partners thatre cn instatnf t cral cenofhe re atan cnuowo winas or o rithdd easan asia to counter violent extremism, and it means working with paners in the persn gu ng r it cer is deilg vi, meadin cbove foh el to deploy systems like iron dome which protects israeli citizens against the threat of rkets. it mninn bieshie noasiah ss dee un n korea. we will also work to stengthen

the maritime security and humanitarian assistance cali of per e ian o hesi weloth per nas t western hemisphere to tackle the challenge of illicit traffiing and response toatural sas. il sgt ns cali i il dns etr article v commitments and ensure that we can conduct pedition their operations with our european as. wetsuh tan me ger enf sponsibility when we do engage these networks will be supported by innovative smloot int demeof fs patiat cas nd the globe from northern australia to singapore, from jdi ra,an inhouo prce oabie these deployments enhance our ability to train and to operate with partners and to respond to future csi touccehorwe verde eo elthpant

e. my goal is for the department of state to have a leading rolein crafting and cct u fon cyat w c findenur strategic approach to defense partnerships. it is also clear that billing rthipa - bungtnipac a fohe iosll thco a nh dod's capilities in this area. buildingtrong partnerships around the worill req u tota nher miryen of e ta services and the department as a whole also must adapastngthfon liesom emo o maayhe.en ra. avot develop a partnering culture. to that end these sity coatpatind sce id usroe e eclras cni wi n t be built up and retapedded across the -- retained across the forcend

among civilns. in parcular, itsril thwe vtn lag st lagtrng ur erte tght e department. building the capacity of defense min industries and other institutns which have not been ainocffs, bemo pen h to work collaboratively with state, usid, and non-governmental organations to help partn cotrieso thodze fonayhaonut toiosety u. army's plan to align a brigade combat team with each reonal combat andom whwiele ex yethaf cndson exe hepph thil b partnership capabilities and regional expertise. more broadl i want to see the militaryta taron bi, rais fon ricen or of stabilityperations like in iraq and afghanistan, but i also want us to become better at worng wior blcurt o shdecutes, paul rger like brazil and i india to make

significant and positive contributions to global security andgl pe. laeain es to berarhr more capable friends. and allies requires that we make our securi cooperation processes morefficnt ando ae. ar ffwe inth tt rt tsu tur an mst flexible security cooperation tools, particularly the new global security contingency fun are ed to raxdvge e pamhi qupplme cretary clinton have been a big step forward to create incentives for collaboration. r sitcoat prms slyn hwoffe ors,fe funding, different rules governing defense exports that depend on ocseshaareruom dubeeanreburi the cold war. i strongly support efforts to achieve comprehensive reform through these areas in legislation, but i'lso rect the departntof

nsse yadip te- ordepm stlindreense setypeonrore that are under our control and that maximize our use of the highest priorityand m efivgr e adubti og flingen tr with a broad range of defense allies and partners an area ill, of critical importancefotio rindebacy. oicn, aals. rneiily sas have grown from an average of about $12 billion at the beginning ofhe last decade to avageou bin tstfeye ths bnmes growth eorts with allies and partners including the joint strike fighter and thegrou eiceros,.s duesi crc s o nsquipnt rv ad. defense trade is a promising avenue for deepening security cooperation with our most capabl ne ng k efng r rtolte itrtfosng cooperation. each transaction creates new

opportunities for training, for exercises, for relnsp bung lssuts rndy sehgh th nsndy ut supported by defense exports. this is important for american jobs and for our ability top ew dse cils th re a'e cryha den from changes to our system. while in new dhearis mo wilrene t ec auic ocso berbl nstrade. it's clear to me that there is more that can be done to facili dense cooperation wi tti aes a narsal re inak rn dio making simpler, faster, and more predictable for our partners. is means ericin thnes d meas acriyle aup orgu.s.orli requirements up front in the development process. a newspecial defense acquisitn wis e uroad hiemms i titif partner

requests. we've also built expedition their requirements, generation teams th senuion exs adlp o alteefet stlihe rst proposed dense coalition repair fund wi allow us to repair equipment in anticipation arqu. l se ets prtyormeanr pant otad i formally believe that judicious les or transfers of pabilities to responsie gomearta i tag e i dein wd-ggor setychngf the future require us to partner in the plan of acti i've outlined willlto pnt teg t c js s. tol e pin inache programs and capabilities of processes to ild partnership in the 21st centy. sofissthe ntofecenc ngoou also take action, and we will work with them to do so.

speakingcoss te'sonen waccthhe ab and consistent support. one of the greatest dangers to tiury i rtidhooen sdr t le ci this nation. i came to washingtonver 40 s apaof dienenio st went to the senate as a legislative assnt there were bold leaders like to miekoic elary jackn, dirkn and others. reicanoc lltorkogr et dtiou fgn challenges. even when i was a member of congress i saw speake tip o'neill andgranb milor wat doe he es important budget, social security, and foreign crisis

together. oendahe on ob ag t lles f consensus and to find compromise. in the face of that grlock arci dce l qurso t rofo action. in the absence of action, in the absence oneqer de wreth ry pamrilto o ti sit th sieves and domestic -- both defen and domestic. annew defenseat deen anniv oys,diacon asan, and it must rest on a reliable political system epared to make decion be oheaalur iit idito e es t ne strategy i just outlined. it isarhev w t thgeon aecofarth inatl

ri vienll remain complex and threatening. as we look at each challeng we face, it is clear twea a pnein lpade a common security vision, and that we ar more secure when they are more capable ofelpinghemlves lp. ar ysnre th aecftef government deen aonro anrt. in fatthba il cisasu revitalized missile strategy to counter soviet pani ake waeuan liobu trfo mpnty strong u.s. posture and nuclear deterrent. ..

on the face of t earth. tnr, sgt pes orbi to ve and to lead and it depends on cable allies and partners willing to hhe enobcuty. atth k tving d otng not just our national security but our democracy. thank you aga for having me and god blss you and god ble e uesf er ppe] pl] >> mr. secretary, thank you so

much f your vision and your support for what the institute is all aboutnd wwod syo ron the earlier dean acheson lectures and -- please joine here. t y v mh. [applause] >> we have anoth unexpecd presentaon to make but this is vepe dor etofen a eleatoisa yiry al y lee will have a taste of this very attractive cake to ta with yo grat m sre. ♪ hirdau ♪apiryyou ♪ happy birthday mr. secretary ♪ happy birday to ppe] >> thanks a helluva lot. >> blow out all the candles. yocould he. >>nk. atwe

la [inaudible conversations] [inaibonat] ud crsns sths.enn re fheh hid reineeach night this week on c-span2 beginning at 8:00 eastern.

michael duffy and nancy gibbs useiok prenclbo t id fhet hve bk a. a00er thes and bolts of our presidential a lot durrell system in selecting a presiden at alstresint il12 wanor idbust h a jotn eran or oke ch nig this week on c-span2. it is 24tvn anmo, fo ly tit8:00 eastern conservative commentator jonah gold bird on catch phrases used by liberals. snc.hemaown peuar ti rb d. :0rn fmeecta of state madeleine albrightith prague winter. conservative activists bay buchananiscues b ander unctes irns si m. t 00linsid tcis clandestine service which he wrote about in the art of intelligence. booktv all day tomorrow on . thtotitees edisiothro ofyehoe e hlth lhereou up lwe. chief justice john roberts

decided to uphold the law for politicarather than legal reasons. isabt anr ana >> good afternoon. welcome to theote amirr nsti seshis hog anf wo panel program they won on the law. the program for the benefit of our c-spanudience is entitled pre s obac ngt ileaths l b ecofitio powers as the next panel will be discussing the substance of the matter where we go from heras a mattf pic so t oral arntn tobamacare litigation in late march, deribed by cnn's jeffrey in as a trai t nitiwee rekibot d he sme cecisnast thay o obamacare's individual mandate not on commce clause grounds that congress's taxing power. no h tk ten

ou matido chjueer d a e rtr rausce said in effect if it works for the chief it will work for us whatever our reservations may be. ree tok sinlasith ka's rmraef the decision came down and in the pro and con panels the ual tihepl sre ugthmews w drothat perspective to zero in on this decision to draw out as much as we can ithe time we have to do so and spreedo inucr l 'mnginucac earefe speaks starting with randy barnett. i will give a very brief introduction to eacofur bserebi ngisnguied. y et theat esofegal theory at georgetown university and law center where he teaches constitutional law and contract and also taught criminal evcey rtnehips spnc vingfe ae er onnan h wtearrd l school in 2008, he was awarded a fellowship in constitutional

studies. he is the graduef noes ursand arwl. teadngvae se aosoheoo unta attorney's office. in 2004 he appeared before the supreme court torgue cana ce cculrg ie h rc wfrhahe eslyuebe t sueourt but for reasons that were not at all his fault of the court erred again. heor brixa hes ahoof thst cst presumption of liberty princeton 2004, constitutional law cases and context, structure of libe justice a re aw rd 1dthoo are ulu seco randy barnett? [applause] >> thank you. always a pleasure to besked kato. vehen pp d herocon haeein t cllng a re s bore the law was enacted in 2009 when i wrote heritage foundation legal meranda money and constitutionality of the individualanda w da srtatni ar e onvdge ane fht cotutionality of this bill and the individual mandates my

colleague david rivkin who is wall street journal piece in september of 2009 was the rst e id in a t tion quen t se stk deonyo knidoto ay we hoped it would and this was a real crushing blow to liberty and it was cshinbl tolf. wevtehe ls d stte t los i t fr bee llome things that came out of this case and i don't want to be characterized amho in theututng nrstlyimc vinutco asad a iwa lout jt cat s a bad day and a bad loss does not mean it could not have been woe. becaused veen. i knd ctaes le isenn ki of em alohani the stuff what we accomplished while still bemoaning wha we failed to accomplish is to give thhedeigviry any acbtne it nto as inerexnhat iant tot rwh this case was so g and historic and the reason why this -- the supreme court graed a st t d of argt ec t renoneutwoug es tth

. the first was on obamacare. the first was on the issue of whether the government and the cotry would controlur mel re a rn dcol mel ive d erhail amlltee tiipinduo the government and essentially change our form of government to one more closely approximating our political system toneor atwern i n'vethagt steue. ke hnibungd ioo that doesn't mean i necessarily want to live under the political system. a social welfare, social cr ifstilabio ma belve he itae omo asug thcougin the table with this law was the constitution ofhenited states. our constitutiofo o gornmendpacupaf foven icyser gomes ofitnd enatow thasn ri un s for from its founding and a principal the supreme court has never denied and often unfair and. it didn't ny it in the new ourre ci it nev d it. hedialdahi tor oth bl ich was enacd by congress under its commerce clause authority was going to be upheld in this

case ueromrcau auitan toryy ics ngold w inin t eliminate the enumerated powers because the theory under which this can be recommended anything can be regulated under commerce power. what we uld have at the end of thigatn uld b onow naalblcl i constitution which is exactly what 99.9% of what professors believe the commerce clse stands for and how they teach it tour st i tbeeen ba wthor yea anis iwh ieafr t de. thssalhive reheer to address any national problem at itswn discretion. that puts at stake constitutionally -- what happ lt we le shaht w ino haen ery sis wurede stut s h wlo because everyone assumed and i mean everyone including those on the otr side assumed we would eier win both of these issues or losboth se i odsrd to evinge t constitutionality of the individual mandate we would have to prevail on our commerce clause issue but iwe lost our challenge to the individual ndthoueae ha leuromrc weouurhaen obac and our efforts to preserve the enumerated powers

schemef the constitution. we would havlost on m acoti. ybasd woi toapn. e w o the i otsi tawfeho said this was justied under the tax authority. not e of them id is ly ifuna ing couc oe ut unthax perut untionndhe rcau noe heto position. everyone took the position was constitutional under commerce power and tax power which was decided last week. let's about what was cidelast wk. asecedasek w e fot opiod sue t the proposition that ery law professor on the other side said was frivolous when we went into this debate and tha is there are limited and the er rs thdialur mte ra e mianumeder de c a i omrce clause is restricted to regulating commerce or activity, economic activity that s a substantial effect on interstate commerce and does not reaac dnoaceopl noinyt. its nngss t potodacoc vin to regulate it. that is what the court decided. five votes. at tosn 9 of pssanga pesaitus

ti thpoont read midiretionary power to address national problems, that position did not command five votes. that pitnmand aes fo ifarol t m o thnstis inea o t cotu w iat maintain but what the supreme court says the constitution means than if that is what we are told by those whoelieve in the livingstion that deosle et avveeshe opioat gnm limid d umed wecoceus restricted in the way we mainta from they one and the individual insurance mandate exceeded that restriction. i consider that maj becse thteivulve bn ucrs do tnkpiind dt pn unisfoss wha happened to say that is what happened. if you were in a war and you we in a bigatheyo at b andas on b dinthe sehe ttoun me tndthy having lost that battle but still the engage in the same war would you then surrender that terrain you gaid becae you tat? oue no w d. ths t s ouve weedstiola the books in a positive direction because the position that has now been affirmed b

five justices was notn the book elit rm ofrs t tionawld atanae poti sit wn'reon poon n it is the law. the law of five justices. that is where we are. where do w go from here? this ishyhi iimt. thy tapned ta d t i did is going to talk about the tax par issue because that is on your mind but what about the tax power is bacin? i don't have time tta aut ivioesnay yt inkou i monin llp t thas a d g uc a ibhis compared to the alternative. as compared to the alternative. so where do we go from here? the thapneis gca ime we actlly19 1 t crt strikes down the minimum wage law by 5-4 vote. what is coming after that? 1937 when as aesli prre temti mira tewl reor dienrsis rethe up b5- se on another switch by different justice roberts, the switch in time b save ou bet oi wleuritn th pn at c ncbleratec for the first time in my lifetime the american people and

by that i don't mean every single person but look people wharengaged in public fairand le flow thth t aop haeelnghica nsore suwe fi ther pe b foinerci t haeede the american people were riveted by the decision made last week. they were engaged and they were are and a majority of them tht tffbl acsonutl a rif ht t prcoou fd a nsti ahede dioi by what happened last week. that is a fact. now what happens? i don't belie the eanif e tionngut in citnaw gatlbse tionawngit aifntpoonth pre court. hodid the supreme court changed? the same way as always change. a president n, an teest naan d tefis ne jue. ist as he ioishijuic do p f tex justice? that will be determined by an elecon. . the reason why if iad to choose which of thos thi weerhtg,obace ree conf ha mdaihowhich one of those things -- >> the only tax you go to. >> if you tax me to make me choo thirere d cen wohahoth cotu bseis in p of

to tevse xtimiboever aseinoue titu twee cta lon obamacare. that would take generations. we made od law as opposed to bad law but what we learned is five votess ou vetiart u mbee iou onavfi sbr. a lts n only going to be about amacare but also going to be about the supreme court. this election isoing to be abelngrent itm tin pe f sremeou bveth wtt tion the enumerated powers contained therein and have the courage to upholth nstihees i gh the o w we jualra all a judicial commitment. that is what this election should also be about and if it is made to be abou thatf the iceoarps or ffbyhaapned wnde tof iuet b if tt tanhiadin an issue so the next president actually does nominate better justic and nominated in the pa that we could bg thr

nsti mhi fr nn icnd g e ctec coted to the written constitution including enumerated powers scheme and they have the character to resist pressure to the corary. if that hape wl ok uis, w aha w tu nsao r for that happen. am i predicting that it will happen? no. i am not. in that sense its not opst noedngei i noedthayhi selde or w thec wl me aepli president or republican senate would do if they won. i am just saying that an election is a prequisite a cotualend seofonstutl n haeeowby leanru twe d eharu made. as result of that there is reason for hope and is counterproductiveor nstianbeia to comet t haot boo ooout pps lyhaen ishe tm hit japan go to town and tonsure that the potential r a constitutna meha sak pl thhi iour d imgilbe o 1937. thank you. [applae]

>> tnk f tt at opinion. not sure how big the class is that the do have that point of ew iloweafr did ri j. d aofheak litinternational and environmental grou and he cochairs the terms of major emotions team. heassiveie tioneg adstve inaal liti hee invdus high-profile cases. he represented the 26 states that challenge the constitutionality of obamacar andas t ld id in dicur crt ofean elth ui i ligio lso represented the republic of croatia before the international criminatribunal former yugoslavia and ternionacour jce r mbf s e e i i rnnamariaw d laf w he ial considerable experience with litigation involving national security related maers including defending gbo aions ghaifoecta dseruld f 04 tou 2 hrved er mbeof t u on cmiion on the

promotion and protection of human rights he is recipient of numerous acadic aroio a ininha ede an fohe best meristem affairs article in 1984 and the burton award for the achievement in 2011. hes a prolific writer and commtaryike f o sprse y. u toics e wourn, in pn. t elsewhere? he is a graduate of georgetown university where he also received his am a in soviet afirs and a graduatof mbniitw . pl wme dav rki [aus ase b wh you and thank you from the miami herald. i am going back to some professional eth 19 a iabt ca neel i agree with randy that the commerce clause and portions of thease pe onte o outme inmses cu atin course structural separation of powers provisions particularly the sovereignty stem. ..

e rsnnee ilh roberts opinion court opinion aiculates beneath the federal court to excise umino litee nurder inc er p ha meaningful rinciple. that's an opinion. and some of us who argued d talkbout itee,uit cl ahroe ev eericp p'otnhca atgrcac exercise the powers underthe commerce clause by itself or aided by the necessary u clauseitado sothbsof i onps. nevepi coest. wa pleth th taxi power. whh is what i will spend the balance of my time talking about. you read some discussions about it including a piece in the "the wallee u,"dri d boou ten. fry, oi t exercised about is the chief justice roberts with all due reect, rewrote the law. heidnrp l ans atns ngcoesad.

he rewrote it. it took nancy pelosi remember we need to pass the law to figure out what wt 'sin . ittk em r ite o uh i. cly,ri tais juie tion deference, it's notjusfied by going to the end degree to the wors in such a way to save it froma obli. te w, on innnirei at itot iio ka ta uorte. it's a one-off programs that judges and justices written the law before at oesohea recetnge ke psgeneral police power something that can morph into it. to get a -- let me remind you, we need as said a ew mn a-libuh'rn thme ar. thegard to a taxing power, let's reflect for a second the framers were concerned about taxes and look at the ront riviohe ntoapitl taan ogng ou e rt federal government needed to have taxing problems. it was a problem that the constitution recommended the framers wanted to putm ou ricnshe xiow.

anepothtar erheul tdt tas axand impose because most powers were well understood, you know, own of course if you bringpe icaxoteofar cckpl ld em thpunrtul atiin of pnt o t curve and government may not get as much revenue. as far as a opportunity to amu iviler w aer eye ncdoir po, ounkutit the powers to tax individuals sometimes called poll tax the taxes are posed bddu thllth oo emauheet,wh inseo e n alwihoicmy twgel cepo and e numb rated powers suggest it morphs easily. the framers understand that. thamihacleo o ciin p xese i i. eoft apportionment. it is a fairly on secure term. it happened to the best of my knowledge is once device in t or thsipoon wle e ca a ehe sa tht ldsttu itlde t would sort of assign -- assign a target per the pulati and

with the stateeresentation in e, re, waat rgttaou ndiict rsh a g. it would loo like if you're a large state like new yrk and massachusetts relative to rhode isla im lkinouth oralpoonte d oll det eeio e yiglo mr now, justice roberts, my opinion, incorrectly concluded that this is ot adiectta s tttsis ie r tx'e reiz he nontotw of ir titis. it's not a clearly a tax of income. it's important to underscore, this is a tax that is triggered by- buino e a in i ns h st riaayarme reaarothft e ion opposition of government's motion it's nots tax that is truly measure by the incomeand the whole esence of income ax, easud sc t we. -e iosa ths age oposg the opinion about the tax on gasoline but the whole point is that taxes on gasoline or taxes on coffee or ta e n odcaveaxn sans dt in -- impose

excise taxes is the same. actitiesndthigs. 'st ca fnxert vi fta e fo ce gasoline or cannotax somebody for purchasing broccoli. at would be find. it would be pseax n ta h obsi o co thnio i an -- why it's not a direct tax thhief juefa y ni sp sa yue n athdly cs di tax imposed on individual without any regard for the circumstance. i think in the opinio th cist t'rlk abisl afon buss desgfn ax pollamcaple the meime, it would be a direct tax which would have to be apportion. let's doanher experint leslitih itmp l gn n,obnal men. aaenanb

eiopn. eran g o ic n optimistic as slight optimistic. he also diclaims the proposition again to ave atieaylo i dend s laimt. there used to be days of worried about that. we do do that anymore. and just leaves it at that. if you look at page 42,ha voeano ihese idrftlnt prm hergt g theuen ou which randy and i talking about, if you can have a t substantial rgurymct w -yu a t uryiac s fheb tou is not looking at it you would have a tax that accomplish the general police power type impact helan cosh 'sea slaht caa. as ohiarla nd yav duiveses other mandates which are backed up by a regulatory penalty tax. while it's interesting usce be inf laheksut h o ti fto [inaudible] it's money and it is not -- with

respect this is wrong. ersop hm ha ls eem thanbemti of m op ie hea forces on capitalism. it can be. there's absolutely no difference between mandating the use of occo, an nangu fr t gaoheuf a in n'y a racial man would dissetter no difference between the mandates. now, before i stop, let me try efhilib apnds ohi aterfshapote t hhe cif iclihby calling this type of an approach attacks, he is proding the accountability at the poticis ha nteto ovathr d. weuetu ac thx properly, increas taxes everybody pays have a tax credit that accomplishes the same result. the politicians dsclaim resolute icngsi amperei,n sermrlde d sahi otax ape fue felt by dis nateing as a tax because the keyword has poi assigned te potican nti acllcho ffttxecilit po p t t wu rohe constitutnal architect chiewr as the commerce

it b more difficult. frankly, i consider that as a possibility for efirew ho oedtge n venoceht adston u haenblaintaina per statements by both the president as well as the very same nancy pelosi as well as the whit house ief adan he k m spinen in syhos. 'sey. owv tres hsoinh isa tax for constitutional purposes but a penalties on free loaders. it's a rhetoric. penyorolal os e fjicplin tou d plle ofang this general police power more ifficult, i wonder if he succeeded. the problem is th even if he is rgehhr o e rt btosai ca t lil oble oorirtse before the supreme court in one point in time made an observation specifically referred t themise. e'lkaba ic cahe t smect foon e o spio owrseng sovereignty did n have to be enforced for the chaenge. it's a arrow challenge inthe ga . u othatfamt lillan atha'tag t . itboh t. word as purely

political means. and the factor that t chief arctic lates his limitingfact, e ct tmtflei asle atreab? t ayntual s ngf coguoaa 4000 would not be reasonable and saying okay it's nforce bids the irs. 's relevant. t'slitaor by n an l s mat. aihenthasoho

come to that asat o qaly, n t. ? >>l,ndhs ht er >>y ego twp i with mr. shapiro at the cato institute is and in the editor in chieff o'up ur ewicllu anr anham th st ol if th cout's rm. this is going to be a big one there were many important deonme wn ist as a sest seothunaal rcqi r o is. practiced ain't trust lit --

litition lth er e ol wr. ciboatyo em esna pb ca including the "the wall street journal," harvard journal law, and l.a. times a so forest. he's st wsnt inino lb po hedeendethsecond amendment. he is a graduate of princeton, and in the scool of ecomics he did a master disagree ande er oio ho teicclkefo dg e i us. ur pe the fifth circuit. please welcome mr. shapiro. thyoryu annoo nh ne nojbusotid av's gret reputation individually, but they ae the progenitors, and nighttim ed m fa'sth liti 'snoainth wond in t o lody tdowhat little i can toed avance the challenges and try t restore the constitution. in fact, pehs te eest noharo inseiray'wy tsthbor ed ol e he atchllen and nfib challenge, he was a fellow

friend of the court joining cato on a number of briefs tht i was il tgno thasn fing ur ra s t, s i a weird sort of victory for federalism enclosed in a loss. as i ttled m g te anethbue ca vedidtkicd fehi l teg the ring -- improper clause and spending clause. indeed i filed fourbriefs a e sue cudhi maoes d n codinyg id of ef luckily, i wasn't ofthe of e me kyi who was addressed wi the taxings power. anwahe heeou ontrs i ws striking, i understand why fox news and cnn got it wrong immediately. i think all of udisitting the t a ef icbegono ssy t threar ac ls t crc au e ng wage is incredible. they gave them the power to regulate it. not exce it. it is not aeise lyaulrt wlnginacur trct. ie ivlmaat ises innc reforms such an expansioof

federal power is not a proper means for making those effective. those could have come from any bris nsis viraren bl thwib haasrng he addressed we had to address the taxing power. i thought we had won. and wedid't. i wasn't sure what wagong lyhit a lil si itaroase he opinion. as i wrote it went seems like heade the tactical decisi for something less than whales asnhasfamaf lass. pr ur yursf e l oesoin int case thecharacter became the attorney general of whales. i'm not sure what he is saving the thcourt for. this might jeardiyfe irlioret. n' k h de be ea t otowti'sos tok there. and that is the other big win perhaps the biggest win and may rn out to be the bgtt thasrb r rs e,dur udisse n dethe court found a federal law unconstitutionallal as exceeding congress' spending wer. the qustif tthout kehies ckes

thearasherh fiiaiuct ery congress is -- pressure turns to comp pulse. that is in i the federal system, the federal gornmeculd cod dat cio ctenrc raw eat. t upeld that as recently as '93 and 97. you commonde state officis tofeliin ra rortheao mmee t ival rervprsnote atnd entt to the people and here in effect congress is common deering the people to do the bidding. on t medicpt, t cohe n rgthhe atsrenthse' cl wt congress violated the constitution by threatening all existing medicate funding. all federal funding that went to th te ns l ng d o eyn'acptne retith transformation of the expansion of medicaid that's required under bureaucracy. -- omadnistraon thai g cff e' adm w e ngotheh an e ui choice in the matter. which they're not here. they must either accept a basic

change in medicaid inw thend tene seeddn eyefivbena rondarl ra tn i wn the medicaid expansi however after finding this,y the way seven justices agreed it was constutialla ndn edddi seof m ininbrrvly se toc w y dish -- judicially enforced and the one who laughed. i don't remember if you eer sitsrei feaoaof y. itndke d foit unconstitutionallal deal as well. seven justices found it it constitutial but again, e me e ghis cotualy iv jues tpote foen pp e urer republican appointees dropped off the two other liberals joined on with the remedy saying now, rewriting psiatth kitnllong itolry st c os s esoea in accept the new expansions and regulations associated with those funds. or they can keep the tatus ante thatas iaor obar th di. to e le ti sfma perhaps not quite as muchs a the

individual mandates but certainly the title ii suff, it's hard to recoile, ai evbi. iec st wrth medicaid expansion and applieda severability clause. what the jointfour ustice enca. th tn veliit was an amend story value dedication clause. there was a clause that sad if part othevi i nd cotuale c st arernsothg stdi n, a curious resolution here. the spending clause grants power to pay the dets and vfo gel fof e nsti tl, coa rtpilgn coce the power to granter funds to the state and may condition it taking certain action that congressould not require them to take. veeceng sln lsche tufcachiw anr oa aarious ame kyi were pushing jim is going to be writing the article out medicaid for our supreme court review. he aw opes eons,hdeo efctybkith nt

o ino o contract of the adhesion as lawyers woulcall it in private law. t here the state signed up for onpe og di d gornta elasejmcaw onndley,t la even then let alone in 1965 is differen than t new transaction formation. rather than taking care of ly et pet drly dlere h mae ns t3% poverty line and a whole host of other requirements. this system to prevent spending legislation from being heveaithr iejucerosre mis untoiv int. swo governments not one. again thinking back to federal ten. the multiple overeignsr toeendrct be purtns t lun co sid hoth937 case called stewart machine which was quoted in the last caseregarding ths clause involving coioa lefigu o rag drnge. thgiio s t t syfa. tuioo vegrththy to require the state's to regulate. so again congress may attach appropriate conditions to

detaog tcol e osefer. it hvdmen cont dinenfor states to join th programs. but it cannot pressure them. here the financial idement congress haschosen chef icort ti lderant in t d. cossmnplqe, con stript state agencies ino the national army. what is the test forthe luarfeel mo cteg tt oe oin ohe e idenst spngus jision, well, we're left with kind of a factor that the courts will be grappling with the next time some healthcre o rota sl u hgrng ininorbeuny sut. thcourt frame the issue of whether a state has a legislate choice whether to accept the federal nditions in exchange for federal funds. and there arefurfrs sell e oe an taou wra. heomngpapren 10cef te ta et versus one-half with the 1% of the highway funds. second whether the newly opposed conditions make the law eay a wor ditif ole enthhtsar theno loo tiunr ly oi oonources of revenue. whether the attached conditions

are one that quote governor the use of funds r take the forof atifiotr anasmensreri thatto eoly an s,re lerg ob wth thurt iditin't need to extly specify the line yes there can be coerce by the spending clause. thiss clearly beyond whteve e ne is. e th desr tsuoel t changes. i think i'll leave it there. again, this is we will be -- cebarthpcyue thalarlles ne l s os t eor tion, tso esde and what the court is going to be doing with other programs, could b soon as dodd-frank a big ca w fd fgo th t ee n mbrohee ameuldatisa g the f e economy. but the constitution, i agree with randy, as far as that goes, i'm not sure h much -- how maltin e lil cnlha aionheme cey opcsea ci, knthnl capu in place underlying under the standard. but for the medicaid, for the spending issue, that was eaking new ground an os lmned icahchnga l t. anu. ppe]

thank you now we're goin to have a little discussion when the panelists before we turn t quonomauen megesan antt the case accomplished putting a breakon thcorclenl ca se ce o eenomce hochofa gain was that congress has as far as anyone can tell, never engaged in y suom is ithlynl. sely, the decision did noted at all address the massive expansion of comerce clause power that has followed the new dealntuonalol atp ut soi'tthrellf t pee,elvema or admitly it is a victory against the academics with whom you so often dispute because u vehafucer cl esprce at t ht inhe actual world is that much of a gain?

>> thas all we'rego w e ne e vedisotwyes,w ar ihe n yd h reas nvon be. gth way. if we the win the case it will not be able to do it again. if we win the case, one lw would beefftedhhe afabart. 's wwgnge an tth. igrihoyo characterizing it. i don't tnk if you measure against a realistic assessment of what we were going get -- i alwa woucople n e pte e-f article one and that we also got. i mean, we got that top. the of a fortiondt spic atllwd t. wao utt t poid drtm evhihe david said. but i ant to propose a thought experiment to you about why -- my position all y has been i could be ws t rs atwhti-t'st al ttina w he ws t elatou how. here's a thought experiment. imagine that the drug laws the national drug lw which are mm cereulnse fo u t o. l pe oue dien atldim t niia ollions millionmillions incarceratedded individuals.

that's what would happen. we could turn the tax laws into, i mean the drga into x aopse me reti wu ndtaaldr li tctr abri reion. it wouldn't be a libertarian outcome because it could be against the law. you would have topay a fine. there's a big dereat ng eanng aakulew frheilandero thmiscta cen uns he coy. ou be huge. i'm giving you a practical real world reason why the tax power can beless gstan e erow d aw bl. r ieofh tionld vw enlyi i d thitaolyn the heritage foundation per and might have been in the law review article it would be a more dangerous power because it would be unit. wdlwcosspor to h yt ang l teltoa fi itldmore dangerous, broad, open ended. but i was actually convinced otherwise when i attended one the oral argunts andtheud bransit alcm cu erenou airaaxeyo have to pay the fine. and that changed my view about that. in other words, i think in that sense, the tax power is less dangerous. secondlywell fom pocastdpotsa towh

adstondoa dn t heisatr t. djce roberts also included in miss opinion the idea that i agree with david is difficult line to drw. he said, lk iftheplt geo gtg e asle r . m angti w ybisngo. it brings me to the final point it goes to real estate -- legacy o the decision. the legacy only ofthe on part of the decision that bad us tx pwdsi whin dios s wea kwkio deonwa it ous ce e iofohe reporting tyke place yesterday. this was a political decision. it was not a leelg decision. the legal merits were all o our side. w alalecon eafawot anw dt om sty'pinn nhcfter oral argument. i don't know all of you have read. it haven't been widelyovered. the chiefucerer chd vt rgtce, lk t n w tuidoea wewedtkiwe did well. friday the supreme court had a con fence we won that vote. sometime weeks after that bein texweth prent ud a beto t ere trhaorrnt hane whr kwhl argument had gone or didn't know how it had gone h began to inject politickings into the

deliberate process of th supreme court because the case haenmdlad an n,wa ap e jomoicprgrve e spokes -- not every major many major folks entered the fray. not arguing why it should be decided a certaiwayu whie tbs ld a crtyaydo ottheslse thur ng fope bout this. what that did, injected politickings into thecase and now we find out that we which we didn't kw, senonendshi lftpsu s gh tea sotdfee s ke rs l, the case is lost. the rule is the rule. obamacare is upheld. what is the president issue weht of the decion n ow inn ftud inureecisit e? gih wt hve veoo ie that fifth vote was obtained. my suggestion to you with any kind of politil change in the liticalle,i dcn ishaxar te ciisnolf t d. c esi sui an limitedded and reversed. it is no weighty precedent. what it requires is a change in the political culture. let me clo ith somethingi be. wotheoic cue,thpti uresa t a lticond s suf aaow hanl the olitical rant to

eliminate obamacare if does not happen tax penalties on the con supervision of broccoli will be e t urole an id t coneouat rs tiirue anthpit lt this decision that we got last week will not pose a barrier to the forward progress inliin ereer vent id >>eliodigrwi rath- re are some respects in which the commerce clause is more impressive. it's one of the points that the ie jutice m intr diguben et wostagon balance, if the choice was between the opinion we got and opinion that pivoted off the administration's view of a necessary improper clause an commcusrsi er oong rdywoh litoeg t the opinion without the bad ones. i would also say this to you leaving your side vote more sesl in dt ct omavie im dioveusplt pblifnt inine s that randy mentioned. one of the reasons i felt that we wer in danger on this is- i'm aerg tad quon wh rast iiikif apchmatw t

fod. everything was if you look back in history everything was done for the first time at some point in time. the reason the mandat wre sis, hve s horitalou . topiiy. ha refa at that is straining on the weigh of the own economic and political problems. seeing what's happening in europe and risingdebcng xolioyonoo ouoben. irti mior pocaau thf ro it up a very clever mandate. the reason the mandate came abt is because of perceived need t provideacro bse ct d r sghwad a nger t ou ir toerna onli and we ladies and gentlemen, can think about dozens other instances where such mandates would be very tempting to the litians. da wl d w ytt da he eras aseaheome se foat atin all the circumstance, because we're not talking about drugs here, we're talking about, again, cross subsidizes. the same danerxteti totaine i le pu'sr deitot ae,bu it is still real. i'll close my answer by saying one thng those who are familiar where constitutial

history, folksn the pane heretheyertye itntst iok ho e ra gvmeas dllvpeodof ntter pce power, it has aternated ladies and gentlemen, between the taxing power and the commerce clause. again, prose nott e se wbandrt i u a9ery er

b yihe fica tax and contributing to washington. without getting anything in return if they don't without getting in return on the little mrehailwe ss soy in cpl voar co br i t iehf justice thoughthis much. it's enough of one to be a more of a dole-time situationhan a situation of what this was before hrewre >>elegotot t thunc it ihhehge yu. entify yourself and any affiliation you may have for the benefitof the c-span audience and rdi ding that lestwihe tl ghh. thank you. affiliatn npet. iwhhtts etahorge

s org natee in the senate. there s there any basis for t constitutional challenge? >> go ahead david. >> tis chl o onss mte waoha unted llthus ts stripped away and what is left is tag line and gets mated with a senate bill. i am am trade it wold ot b at ntathera nd buaaithpctha g gon me oueiflto challenge it on the basis if not impossible. >> it would be impossible. i want to to score what david said eres an. thusgi tou watoeso around. the senate takes a bill, they strip out every word of the bill. amend it with a new bilnd airnaedit us atowy t. 'san hrhe impoan nt [iib d 's the point the courts won't do anything about it. if they won't enforce a rule. it goesway. that'shprmh'sw yoedrtho or cotu. hotu cin ertheit ke th aerlsoatw so much 69 iewx -- so much of the constitution has been lost.

>> tenlerio re im fat 'suioabtth opnes t rivkin. i read in one of the newspaper reports over the weekend, that roberts and his taxdecision saioub ld ierseti oiet pgo di and it seems to me, first of all, i guess the question is in facthapislaagt atec ni dn atugthaf the tax equaled or exceeded or even came close to equali, he costof doing he's isop youl inte . , kn cldvo e iftgveg >> that's a vry good question. try to make the same point. by indicating thatforva maty aies tt e rn mekool ernodirebeeea fine/penalty of ad 00 and a fax of $500. it's something that human begs ulowemtl b tei 'slk thhondfe he's talking about he's pretending, if you will that

the essence of a comp polings, a mandate undthcr cl smwnhly mpveosan yi le ofmi not. it's a bait and switch, the compulsion issue has been analyze in the context what you' been asked to d. tt tre u te i hr . thcxtdrl th rm dfce betwn being in prison and not. i'm sure the people in prison would rather pay a fine. it's a narrow sliver. ino l an e tx t nrouliv re cosieexian puven mandate backed by a penalty. so you are absolutely right. it is slate of hand. it really does not work. ag whe yi e teano rcanwtf o thx h o punitive. it's no more money. for exampl if a penalty is to stp away all of the wealth and clearly iwoul bwe. tharitioho neri >>y pl aua htou that can use that to limit the opinion. that's all. >> the guy in the ba. >> thank you my name se rid. i'thastoe unon i'itsir toliok not too

long ago called rehabilitating locker in. i was worning if t mm ng ir oh arogttp opnswhheca t ig ree ke ci bndned rehablghting. -- rehabilitating. >> i don't think so. it was never on the table in the case. what wasn the table is ts far and nofrther. e othesane. ierarni oritas e reasn d rr tanvepn ats a and that opinion doesn't say less than where we're now. that was never on the table in this case. and we iethwa't tu asu r >>ly hn g tth. m byn aal concurrence partial dissent. there is a point she lists the rulings that hereght cop n b d fth snef m. a string sight. it's not so much that it was all about the charge goes. locker nasmelyonfh basethia pren n? >>htte. thank you. congratulations, randy on the language.

as y kn ry l te nstiiesvel ittcntofrein anfee e n fdi chusotsas con firmed because of the willingness to pay home imagine to the rincipals. ituh rsha a leisr dis wa f esm it vent aonutso eylakhpri on response which is to say that future of supreme court jstice who cannot articulate aconcrete eo-inbl nayo d trceyse 'srklyrohe substitute who justice who hea up the prospect on judicial engage and raised a question that goeto therpl tht. whule? 'mi h a's ki ratifoe d on mege levelof judicial review. quite frankly maybe i'm not libertarian enough. i don't buy that. prlem sot fee. thblith'shi tode o dodeit e lil as. derence, to me largely operates in the context of you know practice of administrative law for a live i sh i cod donhi stio w. 'sayrie prce ng pdeatin orvicha can be interpreted in a variety of ways. and one, you know, the worse

possle clause of interpretationsaves i. yoho o ta yon' y ol sle tren care tpti branches bring the constitutional system legislative products about. you don't try to hold them to the drafting perfection. they n nevre it t th te fee. prm sho grveo-ejci ew y l is that you get people for every decision uphold the constitution you get five other thatthatfm - slfrheb. ouourra annti wre u'cin from. you have to rubber stamp. you won't be right. if you look atthesdpo alseivos okat rcga liowhrenre per mebl. that kind of approach is bad. so is hadfmtaca no tt sfen ewldnimlgo ac tanf cse dohake? >> not weed standing my opening remarks. we have differences on the panel, after all. and perhaps randy woudct red. s vs waogrihl . itdesiit fito tyrs republican

conservative republican judicial nominations. this is what youve got. republican presidents and he beenot ning t enhiye isthciyot aetopkijuic tha juese e ck different way. what makes the decision so difficult to swallow is that chief justice rober cud le htn weaca ul hwrnitt lf t dfd dfs rewriting the statute, and, by the way that's pa limb cal, the actual technical phrase i h v i vsti aotrone i t nal rag. itfe inat nab a ad erore under the conceivable reading the statute might be constition. in ts case y should callt vionctaolal couc iwh d i tat kn udmtind 'stu ge iftdoen't change, then you're going -- these results will continue. itocy h n poc. ithtrof a policy question. you said that the mandate is the core of the law. wouldn't it recteay

torhe ale hefy thablidgert, h an usurt ane tself on the $4 billion that will becollected in penalties es, ats rt evempn thbly tify ke eche di tax will collect ten times as much as the penalty and then you have the secetary of hhs defining min m essel ne eetaw bi. t >> s i ere lw d e ex wiiasag that. i don't remember saying it. i may have. i agree with you. this was simplyhe only part of the law other than other than caidate part we had aega sh . eplthhe sue anlas e dno r e 44 setsa insurance equals commerce. it's under the commerce clause. we couldn't go after that. it you're right. it's the nstitutionally erahauth stit id't a wh acze. temaig re wait for the microphone pease. >> my name s sevanndi veafat wttaqstt thue s a pelty although i thought it was a direct tax. i actually found something

compelling about what the d sa whofrs wth anta aesuth foe ossg ev. thveed e naheas not even included among the expressed revenue-raising provisions of the affordable care act. [di n adio la nordintsa >>t m rkas waspedanho there would be noeth revenue because everyone would buy insurance and so it would be a zero take. sofht ee ecey itfottx wo'tx w r e he fr >> right here in the front.

>> okay. betty cook. i'm with the chevy chase bn om cof naspbl t lillio tu, wea enr the "washngton post" basically set whenlet's not underestimate onoer. heililwe e yo lin ecs,si chess. so perhaps this was a political move on his part. but perhaps it wasapolital iur ao, wehu t upseah hig. would like your ntact on that. >> people learned in the legislature. >> let's assume hat your rig i t gehaouerig bytwy al- b hnk s lmoifs dout calculation but it misreads the politics of the country at this moment. but let's assume that you are rit that is an illegitimate basis on which to ke t nstirlngevthy sais pocasra. ourehttant sede ca at's why i can say the case wadecided politically because that's the way that it's reasoned. now we know the code was hng r tiprre outor tis thet gs c

at a oicaecn bu w a m pic ci. m i sn ge a decision. >> that's onic because all along, the supporters of the giioor nsincama vfiot osit wnauseeathou beun t and forget the ida that the democratic appointed justices were never even in play. that's not political them doing that. the morenes pin t latoaco quonifwa lil ver e og three-dimensional chess because we haven't achieved the correct level of wizardry that john robeshs 'se aonfsvng oray irptan consti iri whe y -- what is he saying the court for to fight another day? the reason why we care about the court being -- vg hh smedpde puonnb iro antginnte ti muck is because we all the decions to be respected because it is the premier counter majoritarianpart ofo nstl em wll n te npar cis ies. hi in' tay o he cometoaan't imagine what would be.

>> tt's what we call them on political brnc >> i k w yre ak t i uno eer thdwastrn ediaictyt nn nstance where if you credit my part in today's discussion whereyou the icife nitin anor amou akg stiol rtee. the two good portions of the opinion and one bad one, taxing power and stroids that s capableouse. th i herisr mo o. iyamiuos. ouort nowi e ur danth pe walk about it have not read their opinio it's long. 183 pages. you need to understand the case w. thonndan t urs tig r. it tadd oin bee bvear eorus ots i n to say something -- i think it's important to be reistic about how the other justices behavior. i think at the justices who were the liber se of t cowditeae ofine. anc wwih agth9% faroes agree withhat there's a national problem calls in he constitution that's a principled position and they were voting out of principle. anthen i thwave to rei-n i sof er htdut bliciamis jceo pe srkdthlllao lt brayed byhe fact that

chief justice roberts changed his vote and who tried to prevail upon him not to change his vote theyeser an fu t refoat ope e dee ittehe fu oon th jue'ininir io th is not -- i don't think that's ever been done before. they wrote an opinion that refused to mention the xistence othe iefj'sig io onto rizee ssngst ie stopn. >> toven arnt >> this was a deliberate misstatement by them of how often dithe word about how the case was decided. so i do think we have to be realistic abuweer atio d ahet ot. is nota ovrbo llnyg. av e ylain whthjeo come and that is in the future what we have to isist upon our justices to have the courage to enforce the constitution ev whene preapeso . da t ou fte icide oge. >>nsee rss because he estimated one tiny point. roger ges to ask the last estion before webreak. r rfnd o er ss. ou ah e ch de fe clen xiowhecuce >> therewill be -- how to put it, things like asking why think about the ality or the council eatmts bgdvse t bege iteyhabee iw of g er o at

or boards into the general police power. i'm when wrong and that wouldn't happen. i know there would change in november, but ray isls ri thea ekss d lyl ne i h tsininsuha 's tt. sos fitihe would be the use of taxing power todvance this kind of goal we can chlenge it. like we etosud desunpsf r ort pbl bue gsa e i the commerce clause we have an absolute slam-du in terms of se law has exisedefor it ts thnd'tlp aled uf ta we 'sa. tdot u h. >>arin take thes15 minute breaks. please, be back here in exactly 15 minutes ter so we can get the next program going o an erretr oe r l onhcofloo wes ie eacm inmine kif panel. [applause] ud crsns

since theu.s se i ce thelhoiay ai ooinim m chht hwe n c-2eig pm. er a house financial servic subcommittee last week held a hearing on financial transactions made with mobile phones a layr hf hde seoucoit en euat dt r l lymsee o esrggresswoman shelley moore capito chaired the hearing.

>>swl oeto de msloisn her way and she said go ahead and start. so i will start with my oping statemen fiitanta es eas omttha on f inare a einha rvs im erthe current landscape of mobile payments. earlier this week the ranking member and i had a dinner, and bipartisan than that fford members antaf ortio n t dien chgi eentn lemean fne ca syis exciting future, and i wish i had the brain that to be able to invent some of these things myself. th morng wwillearnu thrrulystur foepyeted h e lotsebl ys ini h rue. e de s tremendous growth in addition to technology that will no doubt influence the payment system in this nation and abroad. wean't really imagine what the nome yesf no r rastiot r e ittoerd ruof a th leam. today's regulatory structure provides seamless protection for consumers, easy resoti a otinonuer thfnngersm d ndtoeas ifs wtnsold

amimjor. rthonwe have two very important reasons to talk about today's regulatory strucre. the federal reserve has been the expert n the paymentsystem for a tand osnad la eomdc e ymina oft om nptpil elepance e the consumer protection duties were transferred to the cfpd2 years ago it will continue to be an important player. as the inessesra he rsenhng wa, oh rm enaiudg thtio hn bill billings may not fall under current payment law as we understand it. the treasury finaial imes foentoofn hefimnyndrin or itin bpotion to tell us if any parts of the newer forms of payments might fall outside of our current requirements for financial institutions to rport spus ct. tertdiiste rtht anicostwd nk wdic t we must work harder to follow the future of money to establish and receiver of mney at the transactions move ym wel foans n tnsthco att r thcb wtanth h tns for the work they've done for preparing in today's hearing andor their years of stea government service. in particular the committee would like totakre

eihisyefri t ofn. athelgetneof on wweowsry ic j were aware you are transitioning to another job and could ave declined this devotees to testify. as we especially want to thank you for comingtoday. i would now like gze- erei. laer th erini >> we had the democratic cauc for health care -- >>ilymfing an chairwoman and welcome the federal reerve and fincen, and this is the third look at the issue ofmbam i tcm r d coterdithes eris ois eholog and to look at it and expose the new technology to members of cnressdwsw eie teed pld rein ge ut ah fe eshetn inorelvreacting and being proactive. i think i would like to put my opening statement intheeo i verngd ulkethe hey y haheporty kqs atiy e of identity and

security for the consumers with thesnerouc k i dck >>ouikrcoe . ecr omues >>nk oumdcr trohe mobile payment industry represents a tremendous opportunity for everyone come from consumers and merchants to financial institutns and oth ovrs lemehalrdy en h mt gnanvntnd nspyenthe e away from checks to debit cards. we should bring a great number of benefits particularly in the form of competition dlow st or er t ntl py ma austu aulatory framework that helps protect the private information of mobile users but also encourages investmentand noiowneiu. not s eyreevt men tas significant policy initiative in this area which was price-fixing in theebit card market was the t sioft re d la s d. di or o ak ma c mpeth y'harg helps congress and regulators embracethese new innovations added that it leads to a properly constructed la rmwo ttwrs eveboive i i ak >> s fhrnt >>nk vmch.

i commend you and the ranking member for putting this very important and timely hearing together. noing uld omey tap ace o chgyntmr of tin me es use. we basically become pleasant the captive by the cellpoed e tasuhae icpoar dqaty prteo sewi inonintification taft. many people may not know but 92%, 92% l pe nseepoes paonsgoeby h y,thtat esal other types of services that are connected with it. many times peole have their ba accounts, their bank em neimil es thavdiifrmon phceal fmn, crongifrm all on their phones and so it has become an integral part of our physal being and so we real h t a tadtepecon e e, ohe ph awawel art phones, which are capable of processing mobile pament

edary whouk en sco h ninou impact that mobile phones have on our entire existence partilay heti rmn ont el re. vyrt sut' vempntma sure that proper regulations are in place to protect american people and i look fward toherinth pa thyo >>nk.tt t elvr i attsarelean d tne an the first presenter is mr. james freis irector offin imnmeethe rt ftsuw wemer em >> chairwoman capito, ranking member maloney and members of the subcommittee -- >> can i ask you to pull the micropne? for somera- u 'mfesi heic fn reedbe t tscth fo oestas anul regulatory for mobile payments andther emerging payment methods. my testimony today wl focus on some of the moto la anacark bedotpeemi aboffn sm chgiledvs te iovive yso move money. at the outset, i would like to make a distinction betwe

mobile banking and mobile ym. ilbi kinved mmat tdiio omact erabu eicoofepor stiipaents essentially involve the production of the fund's outside of the bank account to affect payments or other transfers. letmemhzet t ty ofatvr ujct t vafna t fotieran rrt nc purposes. either is part of the requirements on banks or a part of the requirement on money transmitters. coinasys ev rly icoo cohee oan ea reng ulat. e apiflyt vebiayments and other innovations. the rule was develod to be technologically neutral and hopefully ver new developments for years toco spictevo s or tyi vis poote ic ero communicatio vehicle. if a mobile phone lowndes person-to-person payments or payments that cross borders in or out of the count, thenthe idusen h st ec o antiavocesi pltro fincen possible money-laundering rather suspicious activity. in furtherance of that fincen's regulations make it clear that the acceptance of thefnsm onrsanhn tris oed otpeone tiy ncit y transmission.

and that any person doing business pulley or in part with the united states that engages in the money transmission regardless of other bess chemuio sceulelb see ssjet he retian uh must register and comply with all the requirements applicable to a money transmitter. shortly after the publation last year th final prepaid acss n srtth come tgn o itrgl fi a eis w haees prtas om the prepaid access industry. they've already reased a number of a guidance with respect to the prepaid assets regulaonsawe ante thadngucwo behngra ts oe is asth du adeurth ha l ng requests for clarification guidance on the new regulatory framework. i would allow like to mention some of the fincen'w t llk heil omnd e. por insp tawnren guy idee nutop er dend bu a rkgs of the payment mechanisms and to provide steps to utili this understanding in specic criminal investigatns e nt wcu le ant prin l f bsnt aasnt act neinest trin m payment industry where different communications systems and financial mechanisms meeand become interwoven and the same ovalbiay

sansa somis o intettthh icons lio the transaction than being processed through the internal system. the payment of the fundshen went to the recipients wil co on cle oe san,hi tyllce at meena o ilontaidesth s n ito mobil account. this transactional overlap results in multiple informational chokepoints tht as lrct fotonee aindny nd sans sedh vebj rtately, stifel's prepre access regulation was spifically designed to be flexible and to accommodate new technologies as they emerge. alt ap iva ymmes enbe usy u nts chthcts fte ceo js described. the administration has made appropriate oversight of the prepaid cess product a priority and it's very encouraged by the progress w mth ngford waed inng b he omhm aencge lemacoer er activity flourish but also help the financial service providers to focus on serving their customers, not criminals. thank you for invitg meo iffo dy. ildh oer quonu a . torres wewillav stephanie martin was the associate general counsel the federal reserve board of governors.

welcome. >>irca me meyms f boe,anu inngtoaarboro y tl th regulation of mobile home payments. the evolution of technologies th enable onsumers to conduct nalsio leicashenal afei icialiv inor s indiby exinacss to the mainstream financial services to segments othe population that are curently ndrbed unedutlu t biay sem, la ek e onomheer the consumers are protected asf something goes wrong such as the unauthorized transaction and number two with e sys provides prrisit anfnttr tmin ttof e me pon fiiafoio consumers. in many mobilepayments, at least some parts of the transaction are settled through existing payment syst sc a ecrtw se t ste s at aly elvpeo h le payments typically aren't related to new consumer interfaces and the payment or settlement arrangemets wch inerip thav ttilyn he t ui. the, elep coy. making payments through

nontraditional arrangements may change the protection related to the purchase dependingon the details the arrangement and the plie tu a ru thisegrark drthymivs h annd bnk regulars have the tools to ensure that banks offer mobi payment service is in compliance th t cmeoton is oapi s uasthe t s sac thapion f fral consumer law to the mobile payment transactions is subject to t rulemaking and interpretive authority of the coumerinanaln ur ptfteus oc tkgns ew bsety ecs thw yment interfaces as well as compliance with the rules on information security, identity theft evonadanon unin ny heueonatave ar wre m enwr, e he lvement of the nonbanks. the can have a variety of roles in a tansaction such as an agent ofh akth ge d ue og mnir, coy l rs patransactions. the applicability of existing consumer protection law or security requirements to to mondanenlyen thlethbeye an h pecsi

i euttt niot difficult to make broad generalizations about the applicability of existing statutes and rules of to the mobile ents isdu h ff pesee orsnk dseie et ay ages poia oe od of both banking and nonbanking to any given arrangement. given the recent technological developments inthemoile patsmetan oft aeyst l maate inerret umartely otd. at the same time given the fast-paced nature of changes in this area, and the potential for significant improvementsine coerciers ugelepnts thfangh ih al aou ehlpt su ht yator regulatory proposal would not stifle the very innovation would benefit consumers overall. an you ain iingm aaray ampywee coteusns wt ha co a wbgn my fiin o questioning. some accuse the the end of your statent the dinner that we ve sliding eef esrsate ol ngffra hinoi patsmet enin sm so thae innovating into the system. one of the concerns that they

have come ani think we share the concernnd gryo mmwednt d cuhrgly regulation and sfle the innovation and cut offw ul a eepan brngnepe rent tan au a. h t f this hearing is to see where are we and where do we need to become not so much where do we ned c pdidntht ssuti ki soinpree o ulke nr es ahen existence now in a formal or informal agreements between the bankson the bile payment issue i thi a stcturthh as gnt sfic age along the lines of mobile paents and consumer protections that ar contained wiin? ordeialwtin gel - ouay aaul neraent rs nechog coming usually you see a partnership often use the partnership betwn a bank d cevi ties lee anul ined tcumbleme ngt heulve raan grnta that will work but many of

these arrangements ultimately get funding ito uob et inispyenia ns wa ua e whntopnit o debit card would be funding those transactions throughhknralth arem alr ac trsve >> i don't know if you have a comment on that if you are aware it is certainlat fincen you are looking nternationally ere are spiastareement foe lmet e awrefdoyjs wn oml reon amet alyst >> i would concur that if you are trying to transferetween ffal inut, ig el os nekssuhas those ivolving what we commonly known as you're mastercardor visa for which you need a bank to einue re tarrltihi. rwyoe akngbo riy emin ifonnmi, mu be that network. you're talking about non-bank participantsnt

ofm kab be btad aea card for swapping paying the two-year visa and that for example a make your rwardsoad haysoiner ul vethoul be vo for your frequent-flier miles or something of that nature is that something that yo'll have taken into consideration or looking at? doou uerstd i ng iudrd at woha me rame erycoosiffn ofoatr e purchasing. and today you have a credit card with flight miles on ithere you canus eorde at s aabt eimch sn e .sr l miles. so that is typically within a very proprietary system. but if i were to se my debit card and i would have toto bactst d ver par tw rpis in onoha ad yoll fir etto what real that transaction will follow. >> i think the important thing on that is that the consumer protection ucsadar thovg so f fft sioh bec or val al at nethsustlook at the consumer protection ws such as the efta and tila if there is a credit card involved.

f cose ts isng veeul winthri deea itnahaosd apply in each case where an non-bank is involved. >> that is the point you're making in some case heyr re ritwi bk lashimn y apormay ypnng on what the non-bank foley is and how the system is structured. hie liaf urti, i g ecdy erai nantifle innovation which was part of your testimony as we move forward to make sue that consumers are procted a m laueri evd thteng e nac ouoka hseovne telo msa terms of privacand consumer protecti, some of the technologies really identify the person by theirvoicy phraa eed e d d t styoadtbcme whisrelyawing crime in america among many of our constituents. and i would like to get the sense fromou bause this n'ceilabk enw o thk d pry at someone has to be in charge.

which agency should take the prime role over the mobile payments which ha reo y prt sc ao et ldbnng ul evod ortee wh y see as taking the form of the primary regulato the fcc th cfthe dera e, su yocomnt fis ei d tw y see this being regulad? we have to have someone to call if there is a problem. >> thank you for te st. mece, aa eaaleprie n rkwirne f ifntan providers and a range of different agencies t ensure appropriate egulation. some come for the ine de ceran rp hripln waat oan ey teia h value by a criminal actor so that is the reason why fincen looks at this aspect and the exit lightgvn th itrngo rv bes hu t prerchin mo payment space to mitigate the rifcminau. swe eyothe

rabniages strulorsr mo transmission's. and we found that that is an important working model just as we do as other in areas of insunce working with the sto heues du e fteml im ronliit ectyn soundness consumer protection but our ability to work with them s on our sybol onoaod gury tons ake mi must abuse >>graslyt a m iniei tequon hn about to take orders of this area it covers so many dffert ypo nt t lyhrto pt n cywtehtxpnc anisat cte dad. so i think as a first step is certainly seems to me that there should be coordination and consultation among allfthe ag'saewes en so as ialp iu haww covg what basis, what gaps there are that need to be addressed

rothencrdinon yos iti fingers at each other and the building on your question for the statement that you have they were testifying to us were tlling us th thiinh lo tewtcnoog at u henoenf ous era ustese products so i wanted to kno what protectios the states or actions have the states put in place tooec cmersroauiz sansipd arto ridpoe ps wiss phone bills. and i'wondering what actions the states have taken if any in this r. ss hv antiawer en m tefio nytamis. statavgiti requirements and some bonding investment limitations. succumb to that extent i know atesav oellway yalou ringin phcoieto eqontnets megywnthc h on. what protections exist in the lecommunicationsfrt paulliten bithigepnta ym orpt my time is up.

thank you. >> mr. canseco. >> thank you mr. chairman. ms. martin, we often talk abou e anh ry os ofoymt son' haakouan ht hl monri a either on bank or underbanked that they would affect this oud d bre ssel eehk st. i think mobile payments present a good prty t ak dbnkt baym rv papatae e efenndperaev cheaper than what the alternatives are today which may be going to a check cashing or ney transmitter and paying a pretty hefty fee. it's also coni ao atodytetae % ee av oil on i aveyrefr teith financial system. to the extent that banks can offer products that are available through that chm,t t tope o b tiiproa e i emenfo check catcher or buying a money order. >> one concrn that i have is that w dopt a regulor frorat tm coynpoibveo

ma pcist no w the space. what specific steps shou regulators be taken to encourage noiondintmenin moyen pce a eurine sit doceae unng lawyers are working? >> the lot of fine linebetween reguont stli noonal a rcy th iimanr gurs e om ioed cons that you would like to see in these mobile payment arrangements regardless of how they are structur. i ntioned a upleny teononsinspoeio cu u t dtiy de tls. so if we can look across all of ese arrangements and make sure that those key concerns are met en maybeoudn t nt odeed irtsil she e etgog u a pe xpe anno wh pilot programs until some best industry practices are established. and then that might be atime ere u ulr pansinan t yosoass or la tmite medot >> ntioe thy mr. freis and ms. martin. do you believe that international standards shol

apply to will payments, and if so, atp ooon goweenhe rs hnistnder coie >> i would be happy to address that fir. with respect to our antimoney laundering counterterrorism nancing fotsae veinatl inesteof peios at he ske ef mitigate. do that of a broad level in terms of different procts including money ransmission t gatpect e ceth enopse chms eine emd evt is the right approach especially based on the concern that you just expressed abot rapidly evolving techlog ttortodne skndecon h o mite sce spica tm ht h any international basis it would already be obsolete in terms of the technological advances that is being done on an internation basnd p thhean an re t uns wrko he i teoum wn i the development of the prepaid access regulations,specifically including mobile phones as i have describ in my etmony e ivelegagewit mycnpaote retoindaw rc prt ie thhoheirof process, sending the copies of the documents come and we put

them out f public notice and comment seeking from them exampl of sfic esy mihvemaw rntus msu erss hespfi er w grehatadi woalddt ses to me this type of service is s new andpeovis isnt trhin t rnna reto ds. rathkif discussions come when systems are more mature and principles and best practices have been established and that really hasn't happene et. utneo r hng ouhm i oare. haou seatm as. >> i would ask unanimous consent to insert the following statement into the record from thus efp and the clering house and i would like to ecognize . fivnufr ess. >>nku foll s inatssor g tmr. of ts nt to ask in reviewing the toic is ensuring that consums understand the product. that's important to undstan epo r g hers vd me poth he n technology we have seen security threats grow as well when it comes to electronic payments specificallyn idntifi ef a el rna

rsetome heeont problems an authorized charges where the amount they are charged is inccute? and thats a common pblem theh scy le ate ntofot enniaeth mvurahi kiof peme t gevo i this tchnique i open up for either one of you to respond. >> the mobile pat relts d ebthh ki acto tct ced tila. those were the resolution procedures the would kick in for consumers. >> how would they be informed because you know they may e cod than r eineths a rt erwhsthete thlabn ie soincund act reimbursed? that means money and a lot of them are on a fixed income. >> thexisting forxample under t fateeitg me es fohte ste shlscd cmei hnk los well. i believe in the investigation has to take plac within ten da if eveati lu cmes rse hil t veat cnuut maast es concluded. estimate ll the consumer be informed of the process of what is going on in that period of time?

us t d kth t t u redng yt tonr ia t ocanensb -- >> it should be and doing it is two differenthings. >> the other point i want to make is that it isn't clear that they apply in allcs h e enk d i notame aen id hv incorporated the procedures and to the rules and their user agreements. it's not quite the same thing as having it apply tit robuey rige ered wn r ams a t same lines consumers sometimes find miscellaneous or added administrative charges tacked on to their monthly ill wed s a o eds. viy hs s e t co die h charges. how consistent or the mobile payment resolutions policies of the various wireless providers whicis the qionbe onsldfel gursura mu onsada >>wrle provider consumer dispute resolution process would be something i adding that the fccwould weigh in on. at ireally outdeom ea feris rkoge thav d iyug d ou hnefr en unde nd that's wrong what are your

rights? and i think that merits some further investigation and fa-fng asserd my tis xi ior >> you actually have 58 seconds left but we have been called for a vote so i'm going to go to mr. lukemeyer andhhe cotes iti wi ttelesha. haoumachan anufor the briefing tonight on the global payment systems the was quit instructional and after the mein ol my f gotoe g m rynean. an ufoget morning and just a couple of follow up questions with regard to my colleagueasedou quontharo rnna das,d msrtyodetme u'oio t nt e rks bfreou tllt hedl th egulatory promulgation here and it's kind of after the horse is out the door if you are going to tak that approach. i wod kheu d wag wth enesdu t vas fiayt aiabuses f thosright off the bat. i was surprised that that comment. >> my remark was directed specificall towds rnna tar tist crn ou >>cugray hnwe

work on international standards and other contexts, it is when we have some rules and falls in place about how that market is gu e i sn w edto rtinigns meal rwe tr innnationally. >> are you familiar with the rule dealing with international wire transrs servces? >> aiiath osul dlwi rnnarens sees >> i am somewhat familiar with it. >> how do you -- are you against it think it's a way to work hoisgointoafc pat esequsn. ha a oeson m o ur her n biay ages thimmind may be you can jump in here that are being used for international remittances. here se ic ic oble pnte heeronmce network. as i have mentioned in my written testimony, but that are covered from the regulat amrk oren,t respdio rqson stwd ie te coe kf s border payments, and it's for that purpose that although some of our regulations are subject

to threshdsre isome vitssaof aby rar r f e tr o -ol threshold automatically brings that payment mechanism including the mobile phone network int the regulatory framework and suec allftoe ro fuhee, oeks the newt if eosa mpan regulatory framework on the united states but do not do something with the abilty of entities from outsidof the cotry ccthaw neil s peca hav mned r la fwo at akdvgeoe full authority to confiscate to us to assert jurisdictioover the foreignased money anteovs the ntatsein u.. sot sd id t oruorbge pe fid the united states. estimate the studies have been done in the world bank and acknowledge the new services have the potential to facilitate money laderi aneyrcmm tt ta ortnaa ams ce transferred from advanced financial one question and ensure the soundness of the financial services. what are your thoughts on those recommendaons areou awe hs? y a 'ssetes odeioha wok toou nthdevme drmio hfinal rule last year and we will continue to monitor.

one thing i wil say is something institud afr jog ag man vers irf rmulg ue, ta lathti acinsnddefct and then reconsider whether the changes are made. it's something we will constantly look at and we will certainly be doing in this area in ryrp ein ete. >>ilelck ba m. hefiquongon toe r coanink the imiss the panel. we have about ten minutes left. thank you mr. chairman. let me jusask you this. s pse- watdie uluiveaeri leh ofm t lose their cell phone or mobile phone? what should they despecially in regarding howtheyrt r lent whhotho t l thlloe? efyolose your cell phone make sure that you have a password. >> user id password? asdecyoce e. sonksont o nss ndstanat ontepoe wh cll ify their phone. so, to have that information somewhere other than on your phone wou b ery godst hlinuig lehaol cyo looue.

utyoid things, what steps with the regulators take to make sure csrs n dwan o mp, doto? 'so tte th cell phone and their password in all of that. but is their anything specifically theyshould do? shldhey just fort ifm cit cagn t lomodd isatoymn at tre ought to be somethin we can communicate to the consumer as to what to do particularly of that consumer th may not havetd tya e hv mem st he no paofngot h with of this advancement in technology. so if we don't have aprocedure, we ought to get someg o s nss w he whatcton ththres instrument. >> i think maybe who you call might depend on wh kind of mobile payment of applications you ha o urp f aewletw cr catedt ul tsmengif st ps i uareard company. so i think many of those procedures that you would already do that you lost your wall woulde the same thing

yowould do iyoou ph >>yoveomen ?whdve yo coer >>hi aware of the risk is clear. one thing that must be said is that part of the reason wh h enodwhr ug phord f bee doe eors keyoot ywl wi c i have lost a card, you do have the ability to contact the provider to shut down the card and gi your neac t os fo oo i tlatbe fi i eyt s imanaty understand e steps to take to get the funds back such as ms. martin described. >> thank you mr. chairman. tyu withei ne ed r ust hecar d semery e adon qioor pal whh they may wish to submit in writing. without objection, the hearing record will be remained open for 40 days to submit questions to the witnesan topaet sps i heo. apiahenei miod kne i vemo scon h st nvng technology brings a different challenges but also different opportunities and i appreciate that with that the hearing is completed